Why Some Altcoins on Binance Crash to Zero: A Deep Dive into Risk Dynamics and Market Structure

The collapse of certain altcoins on Binance to near-zero values in late 2025 underscores a critical flaw in the interplay between centralized exchange (CEX) market structures and the inherent risks of speculative crypto assets. This phenomenon is not merely a function of market sentiment but a systemic outcome of liquidity imbalances, strategic delistings, and operational vulnerabilities within CEX infrastructure. By analyzing recent case studies, we uncover the mechanisms driving these collapses and their implications for investors.

Liquidity Fragility and Large Sell Orders

The AB token's 99% price plunge in two minutes on October 9, 2025, exemplifies how small liquidity pools render altcoins susceptible to flash crashes. A coordinated sell-off of 693.8 million AB tokens-equivalent to $1.215 million in USDT-exploited the token's $2.17 million liquidity pool, triggering a cascading collapse, according to a NewsBTC article. This highlights a core risk dynamic: tokens with shallow order books are disproportionately vulnerable to large, predatory trades. Such events are amplified on CEXs like Binance, where high trading volumes and leverage tools can accelerate price dislocations, as reported by NewsBTC.

Systemic Risks in Centralized Exchange Operations

Binance's system outages during the October 2025 crash further exposed operational weaknesses in CEX market structure. Frozen stop-loss orders and account lockouts during the ENJ and ATOM collapses led to accusations of market manipulation, despite Binance attributing the disruptions to "heavy market activity," according to a BeInCrypto report. These technical failures created a feedback loop: as traders were unable to execute exit orders, panic selling intensified, and prices plummeted to near-zero levels. The incident underscores how CEXs, despite their dominance, remain fragile under extreme volatility, a point emphasized in that report.

Delisting as a Catalyst for Price Collapse

Binance's systematic delistings in 2025 have emerged as a double-edged sword for altcoins. Tokens like BakerySwap (BAKE), Hifi Finance (HIFI), and Self Chain (SLF) saw immediate price declines of over 20% following delisting announcements in September 2025, according to a CryptoPotato report. The exchange's "Community Delisting Vote" mechanism, introduced in March 2025, has further institutionalized this risk. By empowering users to propose removals, Binance has created a self-reinforcing cycle: underperforming tokens face accelerated delistings, which trigger liquidity flight and price collapses, as noted by BeInCrypto. For instance, the November 2024 delisting of Gifto (GFT) and Ren (REN) led to 25–40% price drops as investors liquidated positions preemptively, according to a CoinGape article.

Regulatory and Market Sentiment Shifts

Broader macroeconomic and regulatory factors also exacerbate altcoin fragility. The October 2025 crash, which saw $200 billion in crypto market value erased, was triggered by President Trump's announcement of 100% tariffs on Chinese imports, as documented in a Coin360 report. This event, combined with Binance's system outages, created a perfect storm of panic selling. Altcoins like IOTX and XRP briefly hit $0.0000 as traders abandoned low-utility tokens in favor of cash or stablecoins. Regulatory scrutiny further compounds these risks, as Binance's delistings increasingly reflect compliance-driven criteria, such as inactive development teams and poor token unlock dynamics, a trend covered by BeInCrypto.

Investor Implications and Mitigation Strategies

For investors, the lessons are clear. First, tokens with liquidity pools below $5–10 million should be approached with caution, as they are prone to flash crashes. Second, monitoring Binance's delisting calendar is critical; tokens flagged for removal often experience 20–40% price declines within days, as CoinGape documents. Third, diversification across CEXs and decentralized exchanges (DEXs) can mitigate exposure to CEX-specific risks, such as system outages.

Conclusion

The collapse of altcoins on Binance to near-zero values is a symptom of deeper structural issues in CEX-driven markets. Liquidity fragility, operational vulnerabilities, and strategic delistings create a volatile environment where even short-term price stability is precarious. As Binance continues to refine its listing/delisting protocols, investors must remain vigilant to the interplay of technical, regulatory, and market forces that define this high-risk asset class.